FinTech Industry & Regulation – Page 27 – FinTech and Blockchain Law Watch

Found out that you can’t play in the sandbox?

Feb 09 2017

The Australian Securities and Investment Commission’s (ASIC) regulatory sandbox is up and running exempting qualifying businesses from holding an Australian financial services licence or Australian credit licence. There are a number of reasons why a business may not be eligible including:

the business will issue the financial products;
it is likely that there will be more than 100 retail clients
it is likely that the value of the financial products will be more than $5 million;
12 months testing will not be sufficient; or
the financial products the business deals with fall outside the eligible products for the sandbox which are:
- simple managed investment schemes;
- non-cash payment systems issued by a bank;
- listed securities;
- government bonds; and
- unsecured loans.

So what are your options if you don’t meet all the eligibility criteria but don’t want to obtain your own licence?

Switzerland proposes to reduce barriers to market entry for FinTechs

Feb 09 2017

By Jonathan Lawrence

During its meeting on 1 February 2017, the Swiss Federal Council initiated a consultation on amendments to the Banking Act and Banking Ordinance in the FinTech area. The aim is to ensure that barriers to market entry for FinTech firms in Switzerland are reduced and that the competitiveness of the Switzerland as a financial centre is enhanced. The consultation will last until 8 May 2017.

The Future of Active Funds Part 3: How to Get Started with Blockchain

Feb 06 2017

By Tyler Kirk

In this installment of “The Future of Active Funds,” we explore how an active fund can get started with using blockchain technology. As we predicted in Part 2 of this series, 2017 is shaping up as the year blockchain applications will be brought to market, revolutionizing the way securities transactions are executed. As an initial matter, blockchain will reduce the time and cost of settling transactions. Given the cost advantages of passive funds and ETFs over active funds, there is less of an incentive for passives and ETFs to become early adopters of blockchain. However, blockchain is a solution for at least one major problem faced by active fund managers, the inability to compete on a cost basis.

So, what is an easy way for an active fund to get started with blockchain? According to a recent HBR article, a “single-use” implementation is best. Active funds can begin simply by accepting investments in bitcoin and redeeming investors in bitcoin. This will allow the fund’s adviser, board, and service providers to become comfortable with the technology. Further, as we previously posted, experimentation is easy thanks to blockchain cloud services offered by Microsoft, Amazon, and IBM. However, there are legal issues such as appropriate disclosures regarding transacting in bitcoin and custody under § 17(f) of the 1940 Act. For a good primer on the technology, read our article, Blockchain 101 for Asset Managers. Bottom-line, active managers need to have a blockchain strategy or risk being left behind.

New Special Purpose National Bank Charter for FinTech Companies

Jan 31 2017

New York partners Anthony Nolan and Judith Rinearson will be speaking in a Strafford live webinar on “New Special Purpose National Bank Charter for FinTech Companies: Evaluating the Benefits and Regulatory Pitfalls on Thursday, March 16 2017 at 1:00pm-2:30pm EDT. This will focus on a recent proposal by the United States Office of the Comptroller of the Currency (OCC) to consider granting special purpose national bank charters to FinTech companies that are engaged in fiduciary activities or in activities that include receiving deposits, paying checks, or lending money. The special purpose charter offers the benefits of federal preemption and some state licensing requirements. However, there are regulatory and supervisory burdens that must be carefully considered such as activity limitations, BSA/AML requirements and minimum capital and liquidity requirements.

Bank of England Governor delivers wide-ranging FinTech speech

Jan 26 2017

By Jonathan Lawrence

Mark Carney, the Governor of the Bank of England, has given a wide-ranging speech on FinTech which he delivered at the Deutsche Bundesbank G20 conference on 25 January 2017. It was entitled “The Promise of FinTech – Something New Under the Sun?”. Whilst recognising that FinTech’s true promise springs from its potential to unbundle banking into its core function, systemic risks will evolve. The challenge for policymakers is to ensure that FinTech develops in a way that maximises the opportunities and minimises the risks for society. Read More

Top Five Legal Trends for FinTech in 2017

Jan 25 2017

Judith Rinearson and Robert Zinn contributed an article to AmericanLawyer.com on legal trends to watch for in 2017 concerning FinTech. Trends include:

Major political change
Investments and M&A
Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF)
Blockchain & distributed ledgers
Cybercrime and data security

To read the article, click here.

Accenture runs its largest ever fintech accelerator programme in shadow of Brexit

Jan 20 2017

By Cameron Abbott and Allison Wallace

After fielding more than 300 applicants around the globe, Accenture has selected 20 start-ups to participate in its largest ever fintech accelerator programme.

Artificial Intelligence, Blockchain and gamification technology are all key features in this year’s 12-week programme running in London.

By the end of the programme, 8 start-ups will be selected to present at the programme’s Graduation Day to a group of venture capitalists and financial industry executives. All of the start-ups will receive mentorship from representatives of 28 financial institutions.

Accenture’s Tom Graham told Finextra “the transformation requirements that the financial services industry must undertake to remain relevant arguably pose a bigger challenge than the immediate geo-political uncertainty casting a shadow over the industry”.

Dubai International Financial Centre launches region’s first FinTech accelerator

Jan 17 2017

By Jonathan Lawrence

Dubai International Financial Centre (DIFC), the federal financial free zone situated in Dubai, United Arab Emirates, announced on 10 January 2017 the launch of the region’s first FinTech accelerator.

The FinTech Hive at DIFC accelerator aims to create a platform that will provide selected companies the opportunity to test and modify their FinTech advances. It will identify leading technology entrepreneurs and companies through a competitive process and offer them the opportunity to collaborate with executives from DIFC and regional and international financial institutions. Accenture has been chosen to set up and operate the accelerator

About 150–200 companies are expected to take part in the FinTech Hive over a five-year period, and no specific funding amount has been provided. The FinTech Hive is also interested in growing companies that have a product currently deployed outside of financial services but that are interested in entering this sector.

For the FinTech Hive at DIFC website, please click here.

The Future of Active Funds Part 2: Don’t Just Be an Active Fund …Be a Pro-Active Fund

Jan 17 2017

By Tyler Kirk

2017 will likely be the year of blockchain, and active fund shops should take notice. With over a quarter trillion dollars fleeing actively managed funds, see Part 1, 2016 was a disappointing year for active managers in the U.S. Blockchain’s cost savings might just be what the doctor ordered.

For 7 years the world struggled to understand bitcoin. Bitcoin was introduced around November 2008, declared property by the IRS in March 2014, and declared a commodity by the CFTC in September 2015. With bitcoin no longer novel, 2016 became the gestation period for bitcoin’s more profound invention, blockchain. As 2017 picks up momentum, we will begin to see financial institutions bringing blockchain applications in from the fringes of the industry and revolutionizing the financial markets. Consider the race by banks to patent their blockchain ideas. It doesn’t look like it will take 7 years for blockchain’s potential to become reality.

Indonesia’s financial services authority issues its first FinTech regulations

Jan 12 2017

By Jonathan Lawrence

Indonesia’s financial services authority (OJK) has issued its first regulations relating to FinTech. The regulations lay out minimum capital requirements, interest rate provision and education and consumer protection rules.

Every Indonesian FinTech P2P lending firm must now register and secure a business licence from the authority. A company must have Indonesian Rupiah 1 billion ($75,000) in capital to register, and a further Indonesian Rupiah 2.5 billion ($188,000) to apply for a business licence. These figures are approximately half those that had been proposed in previously issued draft regulations. Foreign ownership is limited to 85%.

No maximum interest rate has been set, which again contradicts previous drafts of the regulations which set a cap of seven times Bank Indonesia’s seven-day reverse purchase rate per annum.

Muliaman Hadad, chair of OJK, told the Jakarta Post that the regulation was only an initial step in the authorities’ efforts to regulate and supervise the business. “What’s important is they get onto our radar because we don’t want to regulate the prudential aspects hastily. We want to provide [business] transparency guidelines first,” Hadad said. The OJK also has implemented a regulatory sandbox for firms to test services for consumers.

Bank Indonesia set up a dedicated office and regulatory sandbox in November 2016 to help FinTech developers. It will also provide services to help developers to understand Indonesia’s regulatory policies on FinTech, gather and disseminate information on developments, and hold regular meetings with authorities and international bodies interested in the use of technology in finance, Bank Indonesia said.

For a full text (in Indonesian) of the regulations, please click here.

Category:FinTech Industry & Regulation